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Residential Launches Decline As Markets Gear Up To Implement RERA


In the latest report from Cushman & Wakefield, the top 8 cities witnessed residential launches of approximately 25,800 units in the first quarter of 2017, registering a 16% decline from the corresponding period last year. A closer look at the trend indicate that launches have seen a steady quarter – on – quarter (Q-o-Q) decline for the last 4 quarters, corresponding with the announcement of Real Estate Regulatory Act (RERA) 2016 in March last year and the demonetization exercise in November 2016. Launches in the residential sector have declined by about 8% during the period April 2016 to March 2017 compared to the same period in 2015-16.

Interestingly during the period (April 2016 to March 2017), the share of affordable segment in total launches has improved to 30% compared to 25% in the same period in 2015-16. The share of high-end and luxury segments reduced to 11% from 13% during the same period. While sales have been weak across segments, it has been prominent in the high-end and luxury segments over the last quarters owing to demand-supply mismatches.

Segment wise new unit launches

 Segment April 2016 to March 2017 April 2015 to March 2016 % change

























Note: Figures in the above table have been rounded off to nearest multiple of 25

Source: Cushman & Wakefield Research


Anshul Jain, Managing Director, India, Cushman & Wakefield, “Launches in the residential sector are expected to remain restricted over the next 2 to 3 quarters as developers will be making intrinsic changes to their business structure, operations and marketing strategies to comply with RERA norms. Consumers would continue to remain restrained in the first half of the year. Further, with mild change in end user sentiments due to news of downsizing in IT / ITeS segment, sales velocity is expected to reduce. A gradual improvement in buyer sentiment is expected towards the second half of 2017 as the impact of real estate reforms will begin to play out in the market. Capital values which are already reduced in selected locations within markets such as Delhi NCR, Bengaluru and Mumbai, will continue to remain under pressure in the coming quarter as the markets readjust in the post RERA and GST regime. Thus, we expect investors’ and homebuyers’ interest to revive in the residential sector post the enforcement of the RERA and GST, with improved transparency and accountability, in the long term.

City wise new unit launches

City April 2016 to March 2017 April 2015 to March 2016 % change
Ahmedabad 9,750 8,625


Bengaluru 15,600 20,500


Chennai 6,375 6,800



Delhi-NCR 10,300 20,425


Hyderabad 9,775 10,125


Kolkata 11,600 16,400


Mumbai 26,375 17,125


Pune 18,450 17,675



TOTAL 108,200 117,650


Note: Figures in the above table have been rounded off to nearest multiple of 25

Source: Cushman & Wakefield Research

Developers realign their marketing strategies to boost sales

The combined impact of a prolonged slowdown in sales and the pressure of mounting inventory led to a price decline in cities such as Delhi-NCR, Bengaluru and select markets in Mumbai during the first quarter of 2017. In Delhi-NCR, quoted capital values softened by 1-3% in both the mid and high-end segments across most of the submarkets from the previous quarter. Bengaluru too witnessed rationalization of prices in most of the submarkets across mid and high-end segments.  Developers have restricted new launches and are reducing the effective cost of their offerings by bundling in incentives and add-ons to clear the inventory backlog. While the quoted capital values have largely remained range-bound in most of the other cities, developers are offering several lucrative packages and incentives to close deals for genuine buyers. They have launched higher number of subvention schemes such as paying 5% now, 95% on delivery and some developers are even offering assurances of compensation / refund of difference, if prices decline in the future.


It was also observed that the ticket size of new launches across top eight cities saw an average decline of 14% year – on – year (y-o-y) in 2016.  At the same time, the residential unit launches have declined in 2016 by 12% to approximately 113,000 units and the unit launches continued to slide in the first quarter of 2017 as well. Developers are also focusing on completing their existing under-construction projects, especially the ones at an advanced stage, to avoid contravening RERA’s rules and facing action. Currently, developers are mainly engaged in establishing systems and processes to register the ongoing projects.

Buyers’ sentiment to improve in the post RERA regime; price increases unlikely in the short to medium term

There are mixed views in the market in terms of the impact of RERA on real estate prices. Developers cannot commence sales until all project approvals are obtained. However, it is pertinent to note that the sector continues to reel under the pressure of inventory backlog and slow sales in most of the cities. Thus, we do not anticipate a price rise for the next 2-3 quarters. A significant upward trend in prices can commence, only if the current stock gets cleared driven by revival in buyer sentiments.

Thus, we do not expect significant momentum in launches across most of the cities over the next 2-3 quarters as developers are realigning their marketing strategies to gear up for the implementation of RERA. They will focus mainly on registering the ongoing projects and establishing other internal processes to become RERA compliant. The expected transformation in the real estate market through RERA is expected to be well backed by other crucial reforms / measures such as Benami Transactions (Prohibition) Amendment Act, GST, REITs, etc. Affordable housing is likely to witness significant traction with growing interest from developers and PE investors. Large PE funds and NBFCs (like Xander Finance, Kotak Realty Fund, to name a few) are already eyeing investments in affordable housing projects.